World Business News

Monday 31 January 2011

Unit 3 & 4: CSR - Links to PLC Corporate Social Responsibility Reports

Many of the larger businesses provide comprehensive coverage of their corporate social responsibility activities and strategy. The attached document provides direct links to relevant resources for the businesses listed.
Link to corporate social responsibility.....

Saturday 29 January 2011

Unit 3: Emerging Markets: Excellent summary video

Here is another ‘perfect plenary’ video for the topic of emerging markets.


At under 4 minutes it provides an excellent summary and looks at how emerging markets are proving profitable for YUM brands as some of the YUM brands experience slow growth in the States.

It also covers issues such as first mover advantage and inflation in emerging markets.

Shame it's 4 days too late, but could be useful for any potential retakers....


Monday 24 January 2011

GCSE Economics (Unit 3 'A' Level also): Protectionism


Free Trade areas


Click here to access a you tube clip explaining tariffs and protectionism.

Click here for a clip on quotas and protectionism.

Click here for a clip on free trade and protectionism.

Sunday 23 January 2011

Unit 3: How to find an export market

The main topic of this story on the BBC website is a new report by the British Chambers of Commerce, which says that while the UK’s service sector is suffering domestically, many manufacturers are enjoying an export-led boom. It gives a great example of clockmakers Smiths of Derby, who were suffering from a lack of domestic demand in the recession for their expertise in renovating and maintaining clocks around the UK from St Paul’s Cathedral to Arsenal’s Emirates stadium.


So, in need a new strategy, they looked for export markets which might be in an economic upturn instead, and found out where in the world the concentration of construction cranes was highest, and focused their efforts there. As a result, they have found that buyers in emerging markets like China, India and Russia greatly value the ‘Made in Britain’ label, and it now sees 90% of its business in new clocks coming from outside the UK, pushing profits up by 30% in the past three years. in line with Porter’s generic strategies for analysing market strategies, they have avoided competing with local low-cost producers in those markets, aiming for differentiation instead by emphasising manufacturing excellence for the luxury goods niche markets.

Their success is in stark contrast to service sector businesses also in Derby, which rely on a buoyant local market and cannot change their market easily. A long-established family clothing retail business is in the process of closing down, as they cannot survive in the face of lower consumer spending and the prevalence of low-cost high street clothing chains. The growth of the service sector has relied on the consumer spending boom from the mid-90’s to 2007, but is now really struggling to deal with the prospect of a much smaller market for their services.

A link to the British Chamber of Commerce press release with a summary of their report is here, including their estimate that GDP growth is being held back by the service sector, and that most businesses are expecting to be forced to raise prices in 2011.

Unit 2, opic 4: On-the-job-training - The Come Fly With Me approach

Come Fly With Me looks like it will soon join the likes of Little Britain and The Office as a rich source of video clips for business teachers. Take this example of on-the-job training, featuring aspiring pilot Tommy Reid.


This is also a reference to the concept of internal recruitment. From Happy Burger to Airline Pilot? Possibly!

Unit 3: Adding Value, the low cost airline way!

Another terrific clip from Come Fly With Me - this time featuring low-cost airline entrepreneur Omar Baba. Omar is the owner of the nation’s “eighth favourite low-cost airline” FlyLo. He has worked hard to make his airline the great success it is and knows that the frequent news stories about poor service and dangerous conditions are down to a biased and unfair media. And now Omar has a great idea to add value by providing a new premium service for customers on FlyLo’s flights…


Wednesday 12 January 2011

Sunday 9 January 2011

Unit 3: Should Obama be thanking the Chinese???

Should President Obama consider writing a thank you note to Chinese leaders for artificially manipulating the Chinese Yuan in the foreign currency markets?


For many years now, Chinese authorities have artificially intervened in the foreign currency market by buying up U.S. dollars spent on Chinese products and, in turn, investing those same U.S. dollars in U.S. Treasury Securities (ie, bonds and notes). For those that are not familiar with the foreign currency market, Chinese authorities buy the same U.S. Dollars provided by the U.S. to purchase Chinese products and, thus, leave or supply Chinese Yuan to the currency traders resulting in a decrease in the price of the now more plentiful Yuan and an increase in the price of the now more scarce dollar. The Chinese authorities intervene in the foreign currency market for the sole purpose of depreciating (weakening) the Yuan relative to the U.S. Dollar, thereby helping Chinese exporters to become more price competitive in global markets. It is estimated by many economists, that the Yuan may be overvalued versus the U.S. dollar by approximately 30% due to this foreign currency intervention by China.

So while it is true that this action taken by Chinese authorities clearly depreciates the Yuan and appreciates the Dollar, thus, unfairly harming U.S. exporters; it is also hitting the “sweet spot” by sending those same U.S. dollars back to the U.S. Government to fund the record federal deficit spending expecting to total $1.3T in 2011 and providing American citizens with reduced prices on imports via the stronger dollar! More specifically, this currency intervention by Chinese authorities provides needed loanable funds back to the U.S. Government lowering borrowing costs or interest rates during this important U.S. economic recovery time. It also appears that US leaders are sending mixed messages to China as just last year, Secretary of State Hillary Clinton visited Beijing to encourage Chinese leaders to continue to purchase U.S. Government securities. This seems at odds with US officials cry for China to stop intervening in the foreign currency markets because by doing so needed federal deficit funding would dry up from the Chinese, forcing the US to borrow elsewhere and raise interest rates to entice that lending.

In summary, perhaps in the short term the United States should consider not pressuring China, as Treasury Secretary Tim Geihtner, Obama and the media have done regularly. Perhaps US officials should lay low, at least for awhile, and start pressuring the Chinese again in about three or four years, after the Government’s budget no longer calls for such large spending deficits.

Review Questions

What specifically are Chinese leaders doing to keep the Yuan weak against the U.S. dollar?

Why are Chinese leaders intervening in the foreign currency market?

Which parties, both American and Chinese, are helped and hurt by this intervention?

What would happen, other things equal to U.S. interest rates if Chinese authorities immediately stopped intervening in the currency market? Why?

What would be the immediate impact on the U.S. poor and working class if the Chinese immediately stopped intervening in the currency market?

What policy position would you take as President of the United States on this issue?

Technology and Marketing

Saturday 8 January 2011

Monday 3 January 2011

Unit 3: Corruption in Russia makes it a Tough Emerging Market for International Brands

The chart above highlights the issue of corruption in the world. The darker the colour, the more corrupt!

This short BBC video highlights the issue of corruption in Russian business life - a potentially major concern for international businesses looking to enter and expand into a huge potental market.

Short BBC Video on corruption in Russia

This is also an problem in China and India, with many companies being given preferential treatment by government officials in return for cash.

Check out this BBC article which explains just how much of an issue it is...

Unit 3: Not all companies want to move to China!

This is a useful, short article which illustrates the importance of strategic planning. Dewhirst Group is a major supplier of clothing to M&S - indeed around 90% of its sales are for that retailer. Faced with increasing pressure on prtofit margins, Dewhirst went through a painful process a decade ago by closing down all of its UK clothing factories and offshoring its production in low-labour cost countries like Bangladesh. Some good, short insights here from the Dewhirst CEO on the importance of looking to the long-term, and on why the business decided not to invest in production facilities in China.

Uni 3: China & thre Dark Side of the ipad & iphone!

Here is a story that will really get students thinking about the products they buy and use…


The story has been rumbling for a while now, and this article  in the Independent goes into some depth on the background to the problems being experienced at a massive consumer electronics factory in China.

The sheer scale of the operation at the Foxconn factory in the southern Chinese boom town of Shenzhen is mind-boggling. As the article reports: “The chefs slaughter 6,000 pigs a day to feed the company’s nearly 400,000 workers in this giant industrial complex, spread over 1.2 square miles”

Foxconn is clearly benefiting from huge economies of scale at the industrial complex, but at what social cost? It is alleged that up to ten employee suicides are linked to working conditions at Foxconn - a major supplier of components and sub-assemblies to the likes of Apple & Dell.

The article raises many issues of corporate social responsibility - and perhaps asks questions of us as consumers? Are we comfortable with the kind of working conditions endured by people who manufacture the electronic products that we desire and demand?

You don’t find examples like these in many of the standard business studies textbooks:

“The company, which employs over 800,000 workers around the world, is now playing soothing music along the production lines. Over 2,000 singers, dancers and gym trainers have been recruited, and the group is also hiring psychiatrists and Buddhist monks to help with stress. New fences are also being installed on every worker’s dormitory building, according to local media, which are up to three metres high and are meant to prevent suicidal workers from jumping off the roof.”

Sunday 2 January 2011

Promotion: Useful Guide

What is Promotion?

It is no longer enough for a business to have great products. Lots of businesses have those too. Customers need to know about a great product and be persuaded to buy. That is the role of promotion.


Promotion is all about communication. Why because promotion is the way in a business makes its products known to the customers, both current and potential.

The main aim of promotion is to ensure that customers are aware of the existence and positioning of products. Promotion is also used to persuade customers that the product is better than competing products and to remind customers about why they may want to buy.

It is a common mistake to believe that promotion by business is all about advertising. It isn’t. There are a variety of approaches that a business can take to get their message across to customers, although advertising is certainly an important one.

It is important to understand that a business will use more than one method of promotion. The variety of promotional methods used is referred to as the promotional mix.

Which promotional methods are used depends on several factors:

Stage in the life cycle - e.g. advertising is important at the launch stage

Nature of the product - how much information is required by customers before they buy

Competition - what are rivals doing?

Marketing budget - how much can the firm afford?

Marketing strategy - other elements of the mix (price, product, place etc)

Target market - appropriate ways to reach the target market

The main methods of promotion are:
• Advertising

• Public relations & sponsorship

• Personal selling

• Direct marketing

• Sales promotion

The way in which promotion is targeted is traditionally split into two types - “above the line” and “below the line”.

Above the line promotion

This is paid for communication in the independent media e.g. advertising on TV or in the newspapers. Though it can be targeted, it can also be seen by anyone outside the target audience.

The main aims of above-the-line promotion are to inform customers, raise awareness and build brand positioning. Above-the-line tends to have a higher cost since the promotional methods used are less precise.

Below the line promotion

This concerns promotional activities where the business has direct control over the target or intended audience. There are many methods of below-the-line, including sales promotions, direct marketing, personal selling and sponsorship.

What are the aims or promotion?

Promotional activities have a variety of aims:


For example, promotion aims to:

- Inform current and potential customers about the existence of products

- Explain the potential benefits of using the product
- Persuade customers to buy the product
- Help differentiate a product from the competition
- Develop and sustain a brand
- Reassure customers that they have made the right choice

Unit 3: Will outsourcing slow as the pound falls in value?

A good BBC video clip here, which poses an interesting question – how should firms respond to the falling value of sterling? One firm, Clippasafe in Nottingham, has reacted by shifting some of its production back to the UK from China.


We’ve got so used to the idea of deindustrialization in Britain over the last thirty years that it can come as a surprise to see production shifting back to the UK from overseas.

Watch the clip and try to pick out and explain the factors behind Clippasafe’s decision.

Saturday 1 January 2011

Unit 3: Emerging Markets: Strategies for doing business in China

The UKTI service is a superb support for businesses looking to expand into international markets, and they’ve just released a detailed guide to Doing Business in China. Its quite a detailed, 45+ page document, but it includes some expert guidance on factors for businesses to consider - particularly if they are looking to invest in China for the first time…


I have picked out some useful bullet points from the guide that might be useful for students preparing for the AQA BUSS4 (Jan 2010) exam on investing in emerging markets:

QUESTIONS A BUSINESS SHOULD BE ABLE TO ANSWER BEFORE ENTERING THE CHINESE MARKET FOR THE FIRST TIME:

BUSINESS RESOURCES AND CAPABILITIES

What are the unique selling points for your product or service?

Do you know if there is a market for your product in China?

Do you know if you can be competitive in China?

Do you have the time and resources to handle the demands of communication, travel, product delivery and after-sales service?

BUSINESS AIMS

Do you wish to buy from China, sell to China or both?

Do you wish to establish your own company presence in China, for example through a representative office, wholly foreign-owned enterprise (WFOE) or joint venture?

Do you need to be involved in China at all?
KNOWLEDGE

Do you know how to secure payment for your products or service?

Do you know where in China you should start?

Do you know how to locate and screen potential partners, agents or distributors?

IMPORTANT MARKETING QUESTIONS TO CONSIDER

Where is there greatest demand for my product?

Where is there greatest growth potential?

How easy will it be to market, distribute and sell my product in the regions I am considering?

Do I want to start in one of the rapidly growing coastal provinces of China, where there will be more experience of working with foreign companies, but also more competition and higher labour costs?

Do I want to start in one of the inland provinces, where there may be less experience of working with foreign companies, but also less competition and lower labour costs?

Should I enter the China market via Hong Kong, with its well-developed infrastructure and advanced financial and professional services sector?

Given that well over half of hi-tech related exports from China come from Taiwanese companies investing there, should I be looking to enter China via Taiwan?

What are the local/provincial authorities’ attitudes to international trade? Do they welcome it or do they have a reputation for bureaucracy and obstruction?

Are there any investment zones in the area and what benefits are on offer?

The guide goes on to provide a brief checklist for UK business people who are committed to investing in China:
- Leave your preconceptions at home.

- It’s all too easy to be dazzled or overawed by China, but keep hold of your business sense as tightly as you would anywhere else.

- Do your homework on the market and on potential partners.

- Patience is a virtue. Some things may take longer to set up than you think (especially if they involve bureaucracy), so allow for this in your preparations.

- Take a long-term approach, but don’t stick rigidly to your plans. Things often change rapidly and unexpectedly in China.

- Obtaining good quality independent legal and professional advice is essential.

- If your product is in danger of being copied or counterfeited, seek specialist legal advice on how best to protect your intellectual property rights (IPR).

- Don’t forget to carry out due diligence.